Finance Bill (HC Bill 114)
continued Part 8 continued
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(b)if the appellant does not agree with a determination made by HMRC
under paragraph (a), refer the application for postponement to the
tribunal within 30 days from the date of the document notifying
An application under paragraph (a) must state the amount believed to be
overcharged to tax and the grounds for that belief.
(2)An application under sub-paragraph (1) may be made more than 30 days
after the specified date if there is a change in the circumstances of the case as
a result of which the appellant has grounds for believing that the relevant
person is overcharged to tax by the decision appealed against.
(3)If, after an application under sub-paragraph (1) has been determined, there
is a change in the circumstances of the case as a result of which either party
has grounds for believing that the amount determined has become either
excessive or insufficient, that party may (if the parties cannot agree on a
revised determination) apply to the tribunal for a revised determination of
(4)An application under sub-paragraph (3) may be made at any time before the
determination of the appeal.
(5)Paragraphs 35 (late notice of appeal) and 44 (settling of appeals by
agreement) apply to an application under this paragraph as they apply to an
appeal under paragraph 33, subject to any necessary modifications.
(6)The amount of tax of which payment is to be postponed pending the
determination of the appeal is the amount (if any) by which it appears that
there are reasonable grounds for believing that the relevant person is
(7)A decision of the tribunal under this paragraph is final and conclusive
(despite the provisions of sections 11 and 13 of the Tribunals, Courts and
Enforcement Act 2007).
(8)In this paragraph “specified date” has the meaning given by paragraph 34.
Agreement to postpone payment of tax
47(1)If the appellant and HMRC agree that payment of an amount of tax should
be postponed pending the determination of the appeal, the consequences are
to be the same (for all purposes) as if the tribunal had, at the time when the
agreement was entered into, made a direction to the same effect as the
This is without prejudice to the making of a further agreement or further
(2)Where the agreement is not in writing—
(a)sub-paragraph (1) does not apply unless the fact that an agreement
was entered into, and the terms agreed, are confirmed by notice in
writing given by HMRC to the appellant or by the appellant to
(b)the reference in sub-paragraph (1) to the time when the agreement
was entered into is to be read as a reference to the time when notice
of confirmation was given.
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(3)References in this paragraph to an agreement being entered into with an
appellant, and to the giving of notice to or by the appellant, include
references to an agreement being entered into, or notice being given to or by,
a person acting on behalf of the appellant in relation to the appeal.
Assessments and self-assessments
48(1)This paragraph applies where an appeal under paragraph 33 has been
notified to the tribunal.
(2)If the tribunal decides that a relevant person is overcharged by a self-
assessment or any other assessment, the assessment must be reduced
(3)If the tribunal decides that a relevant person is undercharged to tax by a self-
assessment or any other assessment, the assessment must be increased
Payment of tax where appeal has been determined
49(1)This paragraph applies where an appeal under paragraph 33 has been
notified to the tribunal.
(2)On the determination of the appeal, any tax overpaid must be repaid.
(3)On the determination of the appeal, section 50 has effect in relation to any
(4)The reference to “relevant tax” is to any tax payable in accordance with the
determination, so far as it is tax—
(a)the payment of which had been postponed, or
(b)which would not have been charged by the amendment or
assessment if there had been no appeal.
Payment of tax where there is a further appeal
50(1)Where a party to an appeal to the tribunal under paragraph 33 makes a
further appeal, tax is to be payable or repayable in accordance with the
determination of the tribunal or court (as the case may be), even though the
further appeal is pending.
(2)But if the amount charged by the assessment is altered by the order or
judgment of the Upper Tribunal or court, then—
(a)if too much tax has been paid, the amount overpaid must be
refunded, with any interest allowed by the order or judgment, and
(b)if too little tax has been charged, section 50 has effect in relation to the
51The determination of the tribunal in relation to any proceedings under this
Part of this Schedule is final and conclusive except as otherwise provided in
sections 9 to 14 of the Tribunals, Courts and Enforcement Act 2007 (or in this
Part of this Act).
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Part 9 Penalties
Failure to deliver return: flat-rate penalty
52(1)A person who is required to file a DST return and fails to do so by the filing
date is liable to a penalty under this paragraph.
The person may also be liable to a penalty under paragraph 53 (tax-related
(2)The penalty is—
(a)£100, if the return is delivered within 3 months after the filing date;
(b)£200, in any other case.
(3)The amounts are increased to £500 and £1000 (respectively) for a third
(4)For this purpose, a “third successive failure” occurs where—
(a)the duty under section 55 (duty to file returns) applies in relation to
a group for 3 successive accounting periods,
(b)a person was liable to a penalty under this paragraph in respect of
each of the first 2 accounting periods, and
(c)a person is liable to a penalty under this paragraph in respect of the
third accounting period.
Failure to deliver return: tax-related penalty
53(1)A person who is required to file a DST return for an accounting period and
fails to do so within 18 months from the end of that period is liable to a
penalty under this paragraph.
This is in addition to any penalty under paragraph 52 (flat-rate penalty).
(2)The penalty is—
(a)10% of the unpaid tax, if the return is filed within 2 years from the
end of the accounting period;
(b)20% of the unpaid tax, in any other case.
(3)The “unpaid tax” means the total amount of tax payable by members of the
group for the accounting period which remains unpaid on the date when the
liability to the penalty under this paragraph arises.
Failure to deliver a return: reasonable excuse
54(1)Liability to a penalty under paragraph 52 or 53 in relation to a failure to make
a return does not arise if the person (“P”) satisfies HMRC or (on appeal) the
tribunal that there is a reasonable excuse for the failure.
(2)For that purpose—
(a)an insufficiency of funds is not a reasonable excuse,
(b)where P relies on any other person to do anything, that is not a
reasonable excuse unless P took reasonable care to avoid the failure,
(c)where P had a reasonable excuse for the failure but the excuse has
ceased, P is to be treated as having continued to have the excuse if the
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failure is remedied without unreasonable delay after the excuse
Failure to keep and preserve records: penalty
55(1)A person who fails to comply with paragraph 4 in relation to an accounting
period is liable to a penalty not exceeding £3,000, subject to the following
(2)No penalty is incurred if HMRC are satisfied that any facts which they
reasonably require to be proved, and which would have been proved by the
records, are proved by other documentary evidence provided to HMRC.
Assessment of penalty, etc
56(1)If a person is liable to a penalty under this Part of this Schedule, HMRC
(a)assess the penalty, and
(b)notify the person.
(2)The assessment of a penalty—
(a)is to be treated for procedural purposes in the same way as an
assessment to tax (except in respect of a matter expressly provided
for by this Schedule),
(b)may be enforced as if it were an assessment to tax, and
(c)may be combined with an assessment to tax.
(3)A supplementary assessment may be made in respect of a penalty if an
earlier assessment is based on an amount of tax due and payable that is
found by HMRC to be an underestimate or insufficient.
(4)Sub-paragraph (5) applies if—
(a)an assessment in respect of a penalty is based on a liability to tax that
would have been shown in a return, and
(b)that liability is found by HMRC to be excessive.
(5)HMRC may by notice amend the assessment so it is based on the correct
(6)An amendment under sub-paragraph (5)—
(a)does not affect when the penalty must be paid;
(b)may be made after the last day on which the assessment in question
could have been made (under sub-paragraph (7)).
(7)An assessment of a penalty must be made before the end of the period of 12
months beginning with—
(a)the end of the appeal period for the assessment of the liability to tax
which would have been shown in the return, or
(b)if there is no such assessment, the date on which that liability is
ascertained or it is ascertained that the liability is nil.
(8)In sub-paragraph (7) “appeal period” means the period during which—
(a)an appeal could be brought, or
(b)an appeal that has been brought has not been determined or
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(9)A penalty must be paid before the end of the period of 30 days beginning
with the day on which notification of the penalty is issued.
57(1)If HMRC think it right because of special circumstances, they may reduce a
penalty under this Part of this Schedule.
(2)In sub-paragraph (1) “special circumstances” does not include—
(a)ability to pay, or
(b)the fact that a potential loss of revenue from one taxpayer is balanced
by a potential over-payment by another.
(3)In sub-paragraph (1) the reference to reducing a penalty includes a reference
(a)staying a penalty, and
(b)agreeing a compromise in relation to proceedings in respect of a
Right to appeal against penalty
58A person may appeal against—
(a)a decision of HMRC that a penalty under this Part of this Schedule is
payable by the person, or
(b)a decision of HMRC as to the amount of any such penalty.
Procedure on appeal against penalty
(2)On an appeal under paragraph 58, payment of the penalty is postponed
pending determination of the appeal.
(3)On an appeal under paragraph 58(a) that is notified to the tribunal, the
tribunal may confirm or cancel the decision.
(4)On an appeal under paragraph 58(b) that is notified to the tribunal, the
(a)confirm the decision, or
(b)substitute for the decision another decision that HMRC had power to
(5)If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on
(a)to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point), or
(b)to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of that paragraph was flawed.
(6)In sub-paragraph (5)(b) “flawed” means flawed when considered in the light
of the principles applicable in proceedings for judicial review.
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(7)On determination of an appeal under paragraph 58, where a penalty is
payable it is to be paid before the end of 30 days beginning with the day on
which the determination was issued.
Payments in respect of penalties
60(1)This paragraph applies if—
(a)a person liable to a penalty under this Part of this Schedule has an
agreement in relation to the penalty with one or more companies
within the charge to corporation tax, and
(b)as a result of the agreement, the person receives a payment or
payments in respect of the penalty that do not, in total, exceed the
amount of the penalty.
(a)is not to be taken into account in calculating the profits for
corporation tax purposes of either the person or the company
making the payment, and
(b)is not to be regarded as a distribution for corporation tax purposes.
Schedule 8 DST payment notices
(2)In this Schedule—
“DST liability”, “payment notice” and “relevant person” have the same
meaning as in section 65;
“relevant liability” means any DST liability in relation to the group for
the accounting period.
Payment notice: effect
2(1)For the purposes of the recovery from the recipient of any unpaid digital
services tax, penalty or interest (including interest accruing after the date of
the payment notice) the recipient is treated as if—
(a)any relevant liability of a person other than the recipient were a
liability of the recipient (“the deemed liability”),
(b)the deemed liability became due and payable when the relevant
liability became due and payable, and
(c)any payments made in respect of the relevant liability were made in
respect of the deemed liability.
(2)Nothing in this paragraph gives the recipient a right to appeal against any
assessment, determination or other decision giving rise to a relevant liability
(or against the deemed liability).
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Payment notice: appeals
3(1)The recipient may appeal against the notice, within the period of 30 days
beginning with the date on which it is given, on the ground that the person
is not a relevant person.
(2)Where an appeal is made, anything required by the notice to be paid is due
and payable as if there had been no appeal.
Payment notices: effect of making payment etc
4(1)If the recipient pays any amount in pursuance of the notice the recipient may
recover that amount from the person liable to pay it.
(2)In calculating the recipient’s income, profits or losses for any tax purposes—
(a)a payment in pursuance of the notice is not allowed as a deduction,
(b)the reimbursement of any such payment is not regarded as a receipt.
(3)Any amount paid by the recipient in pursuance of the notice is to be taken
into account in calculating—
(a)the amount unpaid, and
(b)the amount due by virtue of any other payment notice relating to the
(4)Similarly, any payment by the person liable to pay it of any of the amount
unpaid is to be taken into account in calculating the amount due by virtue of
the payment notice (or by virtue of any other payment notice relating to the
Schedule 9 Digital services tax: minor and consequential amendments
Provisional Collection of Taxes Act 1968
1In section 1(1) of the Provisional Collection of Taxes Act 1968 (temporary
statutory effect of House of Commons resolutions affecting income tax etc)
after “the apprenticeship levy,” insert “digital services tax,”.
2(1)Section 178(2) of FA 1989 (setting of interest rates) is amended as follows.
(2)Omit the “and” at the end of paragraph (u).
(3)After paragraph (v) insert—
3(1)Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
(2)In paragraph 1, in the table after the entry relating to accounts in connection
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with ascertaining liability to corporation tax insert—
|“Digital services tax||DST return under paragraph 2 of |
Schedule 7 to FA 2020.”
4FA 2008 is amended as follows.
5(1)Schedule 36 (information and inspection powers) is amended as follows.
(2)In paragraph 63(1) after paragraph (cb) insert—
“(cc)digital services tax,”.
6(1)Schedule 41 (penalties for failure to notify etc) is amended as follows.
(2)In paragraph 1, in the table after the entry relating to diverted profits tax
|“Digital services tax||Obligation under section 53 of FA |
2020 (obligation to notify HMRC
when threshold conditions for digital services tax are met).”
(3)In paragraph 7 after sub-paragraph (4A) insert—
“(4B)In the case of a relevant obligation relating to digital services tax
and an accounting period, the potential lost revenue is so much of
any digital services tax payable by members of the group for the
accounting period as by reason of the failure is unpaid 12 months
after the end of the accounting period.”
Schedule 10 Private pleasure craft
Amendments of HODA 1979
2In section 6AB(4A) after “vehicles” insert “etc”.
3(1)Section 12 is amended as follows.
(2)In subsection (1) after “vehicle” insert “or as fuel for propelling a private
(3)After subsection (2) insert—
“(2A)For provision relating to private pleasure craft that corresponds to
subsection (2), and for the meaning of “private pleasure craft”, see
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(4)In the heading at the end insert “etc”.
4In section 13ZB(5), in paragraph (b) of the definition of “prohibited use” after
“vehicle” insert “or as fuel for a private pleasure craft”.
5In section 14A for subsection (4) substitute—
“(4)For the meaning of “private pleasure craft”, see section 14E.”
6(1)Section 14B is amended as follows.
(2)In subsection (1)(a)—
(a)at the end of sub-paragraph (i) (but before the “or”) insert—
“(ia)used as fuel for propelling a private pleasure
(b)in sub-paragraph (ii) for “so used” substitute “used as mentioned in
sub-paragraph (i) or (ia)”.
(3)In the heading at the end insert “etc”.
7(1)Section 14C is amended as follows.
(2)In subsection (1)—
(a)at the end of paragraph (b) insert “or”;
(b)omit the “or” at the end of paragraph (c);
(c)omit paragraph (d).
(3)Omit subsection (4A).
8For section 14E substitute—
“14E Restrictions on use of certain fuel for private pleasure craft
(1)Restricted fuel must not—
(a)be used as fuel for propelling a private pleasure craft,
(b)be used as an additive or extender in any substance so used,
(c)be taken into the fuel supply of an engine provided for
propelling a vessel that is being used as a private pleasure
(2)“Restricted fuel” means—
(a)rebated fuel, or
(b)marked oil that is not rebated fuel.
(3)“Rebated fuel” means rebated heavy oil, rebated biodiesel or rebated
(4)“Marked oil” means any hydrocarbon oil in which a marker is
present which is for the time being designated by regulations made
by the Commissioners under subsection (5) below, other than
marked oil which is in the fuel supply of an engine provided for
propelling a vessel having been taken in to that supply in accordance
with the law of the place where it was taken in.
(5)The Commissioners may for the purposes of this section designate
any marker which appears to them to be used for the purposes of the
law of any place (whether within or outside the United Kingdom) for
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identifying hydrocarbon oil that is not to be used as fuel for
propelling private pleasure craft.
(6)In this Act “private pleasure craft” has the same meaning as in Article
14(1)(c) of Council Directive 2003/96/EC (taxation of energy
(7)The Treasury may by regulations provide for cases in which a vessel
is treated as not being a private pleasure craft for the purposes of this
Act (which may include cases in which the vessel is used in
accordance with instructions given by an officer of HMRC for the
purposes of removing restricted fuel from the vessel).”
9For section 14F substitute—
“14F Penalties for contravention of section 14E
(1)Conduct within any of the following paragraphs attracts a penalty
under section 9 of the Finance Act 1994 (civil penalties)—
(a)using restricted fuel in contravention of section 14E(1);
(b)becoming liable for restricted fuel being taken into the fuel
supply of an engine—
(i)in contravention of section 14E(1), or
(ii)having reason to believe that it will be put to a
particular use that is a prohibited use;
(c)supplying restricted fuel, having reason to believe that it will
be put to a particular use that is a prohibited use.
(2)An offence is committed if—
(a)a person intentionally uses restricted fuel in contravention of
(b)a person is liable for restricted fuel being taken into the fuel
supply of an engine, and the restricted fuel was taken in with
the intention by the person that restrictions imposed by
section 14E(1) should be contravened, or
(c)a person supplies restricted fuel, intending that it will be put
to a particular use that is a prohibited use.
(3)A person guilty of an offence under this section is liable—
(a)on summary conviction, to a fine not exceeding the
maximum fine or imprisonment for a term not exceeding the
maximum term (or both);
(b)on conviction on indictment, to a fine or imprisonment for a
term not exceeding 7 years (or both).
(4)For the purposes of subsection (3)(a) the “maximum fine” is—
(a)in England and Wales, £20,000 or (if greater) 3 times the value
of the heavy oil, biodiesel or bioblend in question;
(b)in Scotland or Northern Ireland, the statutory maximum or (if
greater) 3 times the value of the heavy oil, biodiesel or
bioblend in question.
(5)For the purposes of subsection (3)(a) the “maximum term” is—
(a)in England or Wales (subject to subsection (6)) or Scotland, 12
(b)in Northern Ireland, 6 months.